point. very modest gains but at about a nine-month high. ten-year treasury note has been retreating just a little bit now it's perked up again back to 3.7% take a look at oil been very sticky in this range now back into the low 70s, $71.45 on wti crude. join us tomorrow "squawk on the street" is next good monday morning, and welcome to "squawk on the street," i'm david faber i'm live from the new york stock exchange jim cramer, it's a little bit earlier for him, because he's in los angeles. thank thankfully, the man never sleeps carl's on assignment let's give you a quick look at futures before we get started here let's call it a -- i don't know. i'll leave it to jim to figure out what that tells us, if anything let's get to our road map this morning as well. it starts with d.c.'s debt drama, the potential market affects investors awaiting tea

leaves from today's meeting between biden and mccarthy plus, we're keeping a close eye on mega cap tech stocks, they are trading at multiyear highs. apple shares are down a bit after a downgrade from luke capital. and ford's ev push, boosting its lithium supply and ramping production to meet its two million vehicle target by 2026 all right, on this monday morning, before we get started with trading, 29 minutes from now,let start with the markets the s&p and the nasdaq are coming off what was the best weeks either of them has had since late march and jim, i will come to you to sort of ask, what do you expect as this week unfolds, particularly, of course, in light of these ongoing discussions around the debt ceiling? >> i think it's really going to be it, david we're going to go up and down depending on what speaker mccarthy says. i don't think the president will be as vocal as speaker mccarthy under more pressure to be able to not make a deal

otherwise, it's a light week for earnings we're still trying to digest the fact that we've seen the consumer prep slip i'm speaking to a lot of people who say the consumer kind of went on strike during the month of april, and the strikes continue in may. and a love it has to do with the fact that people are kind of nervous, cautious about, indeed, the debt ceiling so look, not a great time. i'm surprised the market went up last week, but it was led by those megacaps that you talked about, and they seem to be somewhat immune. they don't need debt they're just strong. >> they are, and i want to come back to that, but let's talk about the consumer we spent a good amount of time on it last week because we got various earnings from some of the big retailers. they were not great. i know you had more positive than not reaction, perhaps, given the market's reaction to the likes of home depot or even target, but the consumer, i want to drill down a bit more on what you're hearing there, what your expectations are do you really think people are holding off on things, on purchases, perhaps, because they're worried about the debt

ceiling? my guess is most americans have no idea about it >> i think that the banks do and i think the banks are worried. i don't think they're advancing as much credit as they would have even four weeks ago, and even four weeks ago, we were in the turmoil. but you know, i'm relying on something that mary dillon told sara, and this is on foot locker, which was that the lower middle to middle was starting to get hurt that's why they weren't spending on, say, nikes deere talked about lawn mowers, the actual plain deere lawn mowers that are sold at home depot as really not doing well if you go to home depot, they talk about the do-it-yourself person is doing a little bit better but not good enough and i think target had good things to say about the quarter past, but the quarter that we're in now, they are concerned, even as they kept their estimates the same for the year. >> yeah. and mega cap tech, of course, which you bring up as well, you know, and it's mentioned in any number of these notes that we've

reviewed this morning in terms of the broader market, whether it's mike wilson, whether it's savita at b of a, i mean, wilson, for his part says, listen, valuations aren't attractive, and it's not just the top 10 to 20 stocks that are expensive. he's say, you know, the fact is that the s&p median stocks, 18.3 times, and even when you take out tech, it's still around 18 times, jim concerning >> no. 18 times, historically, at this point in the cycle, not that bad. and i think you could argue that the only group that is overvalued is if you listen to neil kashkari, when he says the banks have to raise a lot of capital. you take these megacap stocks and some people are trying to make it out like it's 2001 or 2002, and others are saying it's 2021 when 600 deals came public, that period. if you strip out the cash, if

you look at how the earnings are, very positive note today about alphabet, yes, indeed, meta has a big payment they have to make to europe, but that doesn't hurt anything as far as i can see. apple with a possible slowdown, according to loop. that's more focusing on bringing apple down this is the beginning of what we hear about apple always, which is, they check suppliers, and suppliers have always been something that are very elusive. i don't like the supplier call read through to apple because it's been wrong the whole time been wrong for more than a decade so, i'm not playing that game. >> you're not. i mean, this one, you just said, just hold on to it don't sell just hang in there, right? that's your mantra for years now, really, and by the way, not a bad one. >> no, but as a proportion of my travel trust, we're looking at all the megacaps and saying, we don't want to be a mega cap fund there's a possibility we may do across the board cutback just because we're swinging with

f.a.n.g. i never wanted this fund to swing with f.a.n.g., but that's what's happening >> yeah. well, as a percentage of the overall s&p, as we know, just microsoft and apple alone have never been a larger waiting, right, given their market caps >> apple's 7%. that makes me somewhat uncomfortable. it doesn't matter who bought it. 7% of the s&p, i have to admit, is something that's a little chilling for a company that i like very much >> yeah. let's turn to the debt ceiling, jim. biden and speaker mccarthy are going to resume the talks, that's set for later today treasury secretary janet yellen also has been very vocal she discussed the consequences of failing to reach a deal yesterday when she joined "meet the press. >> my assessment is that the odds of reaching june 15th while being able to pay all of our bills is quite low >> so, there will be some bills unpaid if the debt ceiling is not raised >> yes

and many people -- >> have you decided which bills? >> -- including rating agencies -- >> have you decided which bills those are going to be yet? >> look, i would say we're focused on raising the debt ceiling, and there will be hard choices if that doesn't occur. >> yeah, she went on to say, "there can be no acceptable outcomes if it isn't raised. jim, she's been saying the same thing for weeks now. june 1st, we've been working with many have said, well, it's not really june 1st, but june 15th does seem to be perhaps a more realistic date as to when we run out of money >> yeah, i mean, i look at this and i say, all right, who's going to look worse to the american public? and historically, a president who's challenged either by a recession or by inflation who is in his first term is always the loser of when it comes to matters that are, let's say, anything related to congress and i just think speaker mccarthy knows that. i think he's under tremendous

pressure from his caucus, from a very sizable part of his caucus, to go to fall, and i think that there's a -- kind of an unreal nature among the republicans about what default will look like, because they think that americans, as you said, that most americans don't understand it we understand that the banks understand it. we understand that, yes, that the wealthy understand it. we just think a lot of other people are fearful of what's going to happen. but right now, there's a disbelief that this is going to go there's also the continual talk that the 14th amendment allows the president to do this that will immediately go to the supreme court. the supreme court's republican republican court would rule in favor of congress. i don't know why that's considered even a course so, look, david, i just think that this is going to be something we'll talk about all week because it's still too far away from june 15th. >> do you want to buy a six-month t-bill at 5.3% right here you stay away? >> well, look, a lot of people are doing that, and i think that's fanciful, because if you do get a debt deal, and it's not an onerous deal where you get an

s&p downgrade, you're going to be beginning of a move that was just extraordinary as it was back in 2011 led by everything, but some of the defenses, but some of the more aggressive industrials. i don't know, david. i think if you wanted to brag that you got that piece of paper, i think that seven months from now, you're going to find out that you bragged and you made very little money >> really? okay >> yeah. it certainly didn't work out this way in 2011, and remember, in 2011, we got the one-two punch. first, we got a bad deal in the sense of a deal that was sequestered and everybody lost but then, you got the s&p downgrade and that crushed stocks i think the s&p's looking closely. you and i both remember when secretary giet ner said they did the math wrong nobody wants the s&p to make a mistake this time, but remember, speaker mccarthy's -- he's on a very thin -- very thin ice, and i think that that's going to make it so that he has to be more of someone who takes a harder line, thinking that the

american people will blame biden. >> to your point about the market, i mean, at this point, it doesn't appear that there's been a significant reaction in the equity markets, so the likelihood of a default, right >> totally right the stocks that did the best going into 2011 were a lot of companies that felt that we thought the economy was going to be good, and it turned out the economy wasn't bad but yeah, david, i mean, i can count on one hand the stocks that i think are really banking on some sort of default. it's just not happening. the bank stocks are all lower, but they're lower because of all the reasons we always talk about. >> yep it is funny. i did see a -- well, i had a joint jpmorgan wealth management i had to get a wealth advisor, but i can get 4.2% from jpmorgan now, jim >> i don't know what your advisor said >> well, i didn't do it. i don't want one of those people bothering me >> there's nothing wrong with 4.2% maybe you do well in bitcoin if we default maybe you get 10% in bitcoin that would be something people

could expect >> i mention it because you did bring up the banks and we talk about their -- in this environment, and not necessarily deposits fleeing because they're -- people are concerned about whether their money's safe, but simply fleeing because they want to go into a money market that is paying 4% that's the real issue right now for the banking industry >> you're right. the stocks that give you more of a yield than that are stocks that tend to be problematic or oil companies. the competition is severe toward stocks, but we are at the lowest level of equity exposure since 2009, and that was the year when we didn't know whether the center would hold. i think there's a lot of cash on the sidelines, making that return, thinking they're brilliant, and yet if we do get a deal, not going to look that brilliant. >> yeah. speaking of oil and gas, we will talk about that chevron deal a little later in the program. >> big deal. >> but coming up next, ford' holding an investor day, outlining its plans for electric vehicles over the next few years. we're going to give you the details. let's give you another look at

futures as we get ready for an opening bell less than 20 minutes from now more "squawk on the street" straight ahead

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ford is in focus this morning. it's holding an investor day outlining its updated plan for growing its earnings over the next several years our phil lebeau caught up with the ceo, jim farley, ahead of the event, and he was certainly speaking aggressively about the ev market. >> i don't think everyone's

going to have full-size trucks i don't think everyone's going to have electric commercial vans i don't think people are going to have the same electric line-up we do. these are segments that we know really well. and we have already proven we can conquest but it's true. we're going to see more price pressure on evs. >> all right, jim, you've been a long-time supporter here of mr. farley's in particular what are your thoughts ahead of this event, and anything else you want to share in terms of what you heard from phil and mr. farley when they spoke earlier? >> i think that the surprise here is not the batteries. love that. but the fact that jim farley did reiterate the $6 billion in free cash flow number the street's looking for 2.7, so there's a giant disparity between what farley says they can do and what the street things they can do that's what i care about the reiteration says this could be something with an upside surprise the battery news, look, they had to get batteries, and it's the

albemeyer again, continue to win, but it's earnings per share that i care about and cash flow that i care about and david, because i know you're a chartist, the chart, which is horrendous >> is that what makes for a horrendous chart as our viewers now, you're kidding. i have no idea >> the longer term one thing that's interesting about jim farley is he's pre bullish. people don't believe you can make internal combustion and e verk vs and get near what the princess bride -- what musk said mandy patinkin is the real winner here. >> being down in that facility, i'll never forget it just watching and getting the sense for the size and the scale of what they're doing in austin,

texas, at tesla. still hoping perhaps they sell as many as 2 million this year around the world i did speak with musk, of course, as our viewers at this point know, and you know, this was part of the conversation that i'll share around how they're benefitting from the inflation reduction act, which is not something he's often talked about take a listen. >> actually have to build the batteries in the u.s., and you have to build the precursors to the batteries. but if you do, it is, i believe, $30 at the sell level and $15 at the pack level, i believe, if i recall correctly so, that is very significant for batteries, and then you've got the consumer tax credit for evs provided they are built in the u.s., and that the pack is built in the u.s up until december -- until january of this year, i should say, there was no consumer tax incentive to buy a tesla but there was for the other car

companies because they had not reached -- they have not made that many electric cars. >> and he did say it's going to be a significant benefit to the company, perhaps not quite as much as adam jonas has foreseen, which he said it could be as much as a 45% boost to eps over time, jim. and then we get into lithium mining, which musk said, i don't want to have to do this, but they broke ground in corpus christi because nobody else is doing it he continues to encourage others to get into that business, essentially. >> he hates the fact that there really does seem a control price in lithium, and he's dead right because lithium shouldn't be as expensive. i know that the ford deal won't necessarily change that. when you go back to what he was saying about pricing, there is this problem with the majors, like a ford, where they have, as he said, the manufacturer suggested retail price, and they can't adjust it. one of the things that's really dogged jim farley at ford is he is telling me back and forth, looks like this is going to cost

6 cents, 7 cents, and i'm talking about the mach-e they're all reacting to his pricing. when you react to the pricing, you react too slowly and it does seem that once again, musk is just ahead of the game no matter what you do >> yeah. but they have an interesting competition, and musk at least does give them a shoutout for being the only one who didn't go bankrupt, remember it is worth mentioning occasionally that ford did not file -- ford hung in there, unlike gm and chrysler, both of which had to reorganize under chapter 11 >> i have go to jim farley to say something horrible about musk for years he went do it. no name-calling, no things that i think would be good tv, nothing. so, i mean, you know, i can't give you anything other than it's like harvard and yale it's not like a titanic struggle it's some ivy league thing

it's driving me crazy. >> we'll give them time. you never know with those two in particular obviously being incredible competitors coming up, jim's going to give us -- we're going to do a cross-country "mad dash. we'll also count you down to an opening bell that's ten minutes away one more look at futures i don't know what is that nothing. not much is going to happen at the open wait until a few minutes after, right, jim you got a take on those numbers? >> that's nothing. wait until mccthy ysarsa these talks aren't going anywhere. >> all right

let's get a "mad dash" in here and an opening bell what do you got, jim >> well, a company whose stock has been up ever since a report of what a lot of people felt was

not a great quarter was micron and micron has been banned from china over security issues micron is the only company that really went to war against the chinese many years ago, saying they've been stealing intellectual property. it's not unusual they had a fight. what is unusual is they have a lot of business in china it's 14% of their business it's going to be a hit of about $3 billion if you add hong kong in, then you're starting to talk about 21% of the business. so, you can see the company that has $23 billion in revenues, it's not insignificant, so i do expect the stock to trade down there's nothing sanjay can do about this i think that micron is a shot across the bow i don't think that other -- other than the tortured relationship a few years ago, this is just the beginning, unless there's some sort of more amenable situation between the president and president xi >> yeah, i mean, it's yet another sign of this trend that we talk so often about, jim, in terms of this potential

decoupling, whatever you want to call it, derisking how do you view it as part of that is it just another step along the way of this continued increase in hostility, essentially? >> absolutely. micron is interesting. that's the one that is probably the least important when it comes to technology that is, i would say, military, least important when it comes to the technology that may or may not be able to make it so that chin is invasive. remember, we already had nvidia be told they can't have any h-100 chips. i have more on nvidia, which is just incredible. but you know, amd's levered there. micron will be the shot, and then the next would be amd i don't think amd is going to have better relations. >> okay. we got a lot to talk about, of course, talk more about a.i. overall, nvidia, couple of deals to get to, and that opening bell, little more than five minutes away don't gonyer awhe.

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close call either way versus raising another time in june or skipping some of my colleagues have talked about skipping. important to me is not signaling that we're done. if we were to skip in june, that does not mean we're done with our tightening cycle it means, to me, we're getting more information do we then start raising again in july? potentially. and so, that's the most important thing to me is that we're not taking it off the table. >> kashkari, of course, joining "squawk box" earlier, jim. your thoughts about his comments >> well, look, i think that there was a pressing of him by the team about what happens in a case where you have a default, and i thought he pretty much danced around it obviously, if you have a default, then the idea that you're going to have a rate increase is ludicrous. i was surprised. i thought he was in the pause camp but the talked about how there' still too much spend by the

consumer it's wage up fl inflation peopl worried about. we have not had a cool employment number. when we get that, we can say, we can wait some companies are hiring, some are laying off big, but they are not companies that are involved in anything other than technology >> yeah. jim, when it's just you and me, when carl's out, i like to go on the wayback machine, 20-some years ago when we were on "squawk box," we used to have this thing called the key to the market we'd quickly ask you, and you would give us a sense. i'll go to it now as well in the minute we have before we get an opening bell or less than that what do you got? >> i think it is going to be apple. i want to see whether there is a follow-through, apple, the team at loop also said that the -- all the suppliers were going to be under pressure. now, i just think that if you act on this, look, i think apple's a great move if you act on this and you think this is the beginning of the end of the pc and the cell phone as well, where have you been? they have adjusted it's service revenue that has

kept apple going up here i'm not buying the whole downgrade, but i understand it is going to affect the market. it just will >> as we look at the realtime exchange back at headquarters, given that look at futures, we'll see. there's the opening bell here's southern copper over at the nasdaq, solar energy technologies company shoals. shoals all right. few cheers here. jim, you know, we got some deals. let's start on oil let's start with the chevron deal we can also talk a bit about exxon and lithium mining i mentioned musk earlier, but chevron, pdc energy, it's pretty straightforward deal the dj basin in colorado, the permian, sort of half-gas, half-oil they're spending, what, $7.6 billion that's when you include debt for this company not a huge premium

about $6.3 billion overall in terms of what it's going to cost them to buy the shares at $72 a share. i should point out, it's all stock. all stock. 0.4638 shares. your thoughts on the deal. >> i think it's a great deal because it immediately increases they reserves by 10% david, the strangest thing abou this deal is people didn't like this basin people felt that eastern colorado is subject to a state -- this is no texas. it's a state that would maybe cut back on the -- on drilling there is some nice decarbonization here, it has less carbon than chevron's overall -- their reserves. but people have stayed away from this basin they didn't like the regulation. i like it. and i think that what's great about it is it's dirt cheap. it's $7 a barrel, brings down their cost per barrel dramatically, and it's additive in a very short period of time that's why you think chevron not down nearly as much as people

would expect, given how much stock they're giving away. >> although they use stocks in these kind of deals or tuck-in kind of a deal where they're getting acreage. they say it's going to be accretive to earnings per share and free cash flow chevron anticipates accretive to all those financial measures within the first year after closing and it could add as much as $1 billion in annual free cash flow if you assume $70 a share, brent, approximate $224 futures prices as of right now so, you know, i guess overall, what you might expect from them is they have to continue to get new acreage, don't they? >> exactly look, they can add a minimum of 250,000 barrels per day, which is excellent, but david, they generate a lot of cash flow in chevron, and i know that they have had a voracious buyback two quarters to make this back two quarters, and they will have bought back all the stock. it's a cash machine, this company. more bang for the buck i like the deal, because i had

faith in that basin and had been talking about that basin being the next place, and people have been very skeptical about it, because people just don't like colorado you know, mike wirth is perfectly willing too deal with the authorities of colorado, and there's midstream pipe when i pressed the company about whether they have enough pipe to get that oil out, they say, absolutely, which is very unusual, given that had been a basin that had pretty much been left aside because people like permian don't want to deal with colorado, and mike didn't care, and therefore mike is going to triumph on this. >> while we're in the oil and gas arena, might as well mention that story as well, i think friday or over the weekend, about exxon. i mentioned earlier, musk saying, please, other people, try and mine some lithium. we're going to need an awful lot of it. it appears exxon heard the call, because they're buying land in arkansas to do just that as i said earlier, tesla broke

ground in corpus christi on a lithium-refining operation but in this case, it does appear that exxon will at least consider it. it's small, but there it is. thoughts >> yeah, but arkansas is this area where i think that musk would tell you, look, we have a ton of it. you don't have to go to chile. a lot of people are saying, look, in the end, it's going to go to a society. it's right in our neighborhood you have friends at exxon. there's some people that say arkansas just has a huge amount. you know that exxon never drills until they've done a very thoughtful analysis, so i thought this was very positive for the whole industry i keep thinking about that, when musk in the last two quarters has been talking about, please, people, start drilling lithium it's ridiculous. you could make a ton of money. the call is being heard. >> yeah. i thought i lost you for a

second, jim. can you hear me? no yeah jim's gone yeah all right, no jim. that leaves me all alone. what do you think of that? could be an interesting -- what do we got left 26 minutes i wanted to talk about meta, of course, as well, and actually ask jim about that because the stock is up some 1.17% despite what would appear to not be particularly good news, that being that they are going to be fined by the eu as much as $1.3 billion this for basically data transfers to the united states, and nonetheless, the stock, of course, as you see, has had an incredible move during the course of the year in part because as mark zuckerberg has called it, it is the year of efficiency separately, and something that i do want to get to jim on when we get him re-established in terms

of his audio, i continue to hear the possibility of even further job cuts at meta unclear exactly what they would number, but jim, you know, we focused in part on meta, and how many job cuts have already taken place, but they seem to be moving so aggressively in a.i. that they may be discovering other areas that they don't need, and so, you know, i'm working on this, but again, i do believe that there may be even more significant cuts to come, not sure what you're hearing, given how close you are in terms of following that company. >> i know that there's a big pivot. i know that marc is spending a huge amount of time on a.i that's absolutely guaranteed remember, he's also spending a lot of time on reels and reels matters tremendously, because take a look. what was the european fine about? it was about taking data and sending it to the united states. well, i mean, if you want to extrapolate that, how about what

montana did with tiktok? so, i think it's right that he spends the time with reels he always says, at the same time, i'm not cutting back on the metaverse. david, i just don't know i mean, they make so much money in reels, so much money in instagram. i guess you could think long-term of the metaverse, but he's not there on that that's not where he is spending his time, and i think that's what really matters. >> he's spending his time on a.i., right? >> absolutely. >> that's where his focus entirely is. yet, meta does not seem to be one of those names immediately attached to that bucket of stocks, so to speak, if you want to call it that, led by nvidia, that you can play as an a.i. play, so to speak. >> but jensen huang made the point to me, when i was at nvidia last time, that zuckerberg totally in the mix, that there's just no doubt about it that instagram, zuckerberg, all use jensen, trying to figure out how to integrate what jensen's created this company reports this week, and we're going to find out that

jensen huang is having unbelievable numbers a lot of analysts have gone way ahead of what i would like the company to do in terms of what the expectations are zuckerberg's spending time where he needs to spend time this is where the money is and i think it's the money where instagram is being reignited reels has got tiktok on the run. i think this is a brilliant move by him, and yes, they'll still spend a lot of money on metaverse, but they won't spend a lot of time. he won't spend a lot of time i want to know whether new york needs anybody. i understand they have a big real estate footprint, and if they want to get out of it, we know that these contracts cost a lot of money to get out of, but why do they need anything in new york that's what i keep hearing nothing in new york. >> that's great. thanks, jim, for that. >> yeah, great >> it's great. you can convert all that space to residential over a period of 30 or 40 years >> yeah. yeah awesome. i'm sure she's happy when we

seem to be losing jobs, aoc. >> look at the jpmorgan. what does that say, david? >> i don't know. tell me. what does it say >> well, i think it says that neel kashkari is dead wrong. there's not going to be a lot of capital that needs to be added i think there's more consolidation. really good piece this week about jpmorgan have been 13% of the country and the government no longer seems to care about that old 10% rule. and david, maybe the pacwest deal is real in putting another institution out of the equation. that's a deal where pacwest sent some discounted real estate to kennedy wilson, which is the foremost auction house for real estate, so anything that gets any of these companies out of the mix of being heard is very good for jpmorgan. >> yeah. and there's that story you're referring to, the $2.6 million portfolio of loans that's being reported at least in part by "the ft" to kennedy wilson i think it's notable, jim, that we haven't mentioned the

regional banks we're ten minutes into trading, we're just getting to them clearly, they have not been a feature, at least not on the downside, and not, therefore, perhaps as worrisome as they were as little as, what, a couple of weeks back when they all seemed to be going in one direction, and it wasn't the right direction if you least owned them >> what you're starting to see, upgrades there's been some positive talk about key. we know that when you look at these, huntington bank is incredibly undervalued, but the one i always watch, david, is first horizon. that is the one that matters tremendously to me,and this is what i am focused on is first horizon, because that's the one that's $5 billion that got a bid for almost three times that. this is really the one that i would say -- that is the bargain if you want to buy it. i know ai've spoken to the company. business is great there. it is great there. i just think first horizon is what you want. that's the one you want to do. >> as you take a look at first horizon. don't typically mention green hill and company

in fact, i can't remember the last time i mentioned it but if you happen to own it on friday, you're awfully happy today and perhaps if you haven't owned it for any significant amount of time, because what a premium mizuho is paying for this small advisory firm, essentially a boutique it's been around for quite some time it is a public company, some people may be somewhat surprised to learn 15 bucks a share is the number it's all cash. again, mizuho, they're a very aggressive firm. if you look in terms of the lenders into many of the private equity deals, for example, you'll often see mizuho's name in there but they wanted a presence and sort of advisory on investment banking on m&a, specifically, and restructuring, really, is what we're talking about, and so they buy green hill, jim, and they pay basically the 52-week high is what they pay here i don't know if that was the ask and that's what they got talk synergy, they're patapparey already in the same building

already. >> i don't want to say i forgot about green hill, because at one point, they were a storied firm. but will this mean that all the little boutique m&a shops are going to be snapped up, or is this mizuho saying, you know what we have a chance, we can move in there are still a lot of them that you and i both know are not necessarily in the mix publicly that we think are very important when it comes to m&a >> i don't see that. i don't necessarily see that occurring. i mean, there are some question marks out there. listen, lazzard is having a change at the top with the likelihood there that is one of the largest, nonetheless, still considered perhaps boutiques. they to have asset management as well but certainly on the advisory side, would somebody try and make a move there? i don't know maybe they already tried, and it's -- nothing pd ha. and so, they're making the move here, and jacobs is leaving or at least stepping down as ceo. but i don't see it, jim, in terms of any real move here to,

hey, go buy pjt. no go buy -- >> what about silicon valley group's incredibly good research department a rhiannoesearch department thas fantastic when it comes to the media, enterprise software what is going to happen to that group? they are for sale. just radio silence other than the fact that they continue to put out -- nathanson continues to put out great research. sterling audit continues to put out great research why doesn't someone snap them up >> there will be i think it's a process that's being led by, i think, centerview, swan is another one, an advisory firm or they bring a lot of companies or some companies public they focus on health care. >> that's there. it's part of nathanson >> it's part of that same group you're talking about that's being sold out of the old svb. i would assume they'll all get bids, jim, at some point that process is under way. finally, i don't know if we have this i think we may

did you catch david zaslav's commencement speech at boston university over the weekend? he didn't get a great reception. >> if you want to be successful, you're going to have to figure out how to get along with everyone and that includes difficult people some people -- >> "pay your writers." >> some people will be looking for a fight. >> yeah. you know, it was the writers strike it was just generally sort of when he talked about making money. i haven't spoken to david about it, but i bet that wasn't necessarily something he fully expected to happen there, jim. >> i think he's one of those people, he's a deep think guy.

but he's also a well loved guy by pretty much everybody i think that it probably did surprise him, given the fact that when people think of him on wall street, they just think of him as an affable, terrific guy, and who everyone's wishing well. i'm sure there's some people who don't like the way that cnn is coming together because chris has been tough, but he's a man who comes in peace, and i think it was kind of a shame big deal for him shouldn't have happened. >> yeah. a lot of time usually goes into those speeches that's an interesting reflection of graduates and their thoughts these days >> i had muhammad ali speak at my college we were speechless he was unbelievably good the idea of doing anything other than standing up and cheering, if you heckled him, we would have driven you out of school. >> well, he could have come around and made sure you didn't heckle him as well, right, jim

before we go to a break, anything else that you want to hit from your list that we haven't? >> i don't know. i mean, i think that we have to -- i'm looking at a couple things that are important. the most important one is nike, because the big dow stock, and we always thought that the issue with nike would be what would happen in china, and we know from alibaba that china, the middle class, whatever we have of the middle class, is weak, but the foot locker read-through by mary dillon was devastating for nike it's not shocking that it's down and will be down more, given the fact that it's such a big percentage of what foot locker shares >> before we head to break, let's get in a quick bond report, check out how treasuries are faring this morning. that six-month t-bill, that was interesting. 5.3% as for the two-year note, 4.298% and there you see at the bottom, the 30-year is 3.935%. we're back after this.

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coming up this week, we are kicking off cnbc's inaugural ceo council summit on the west coast. we're leaders together t tackle pressing issues from the country's finances, the a.i. revolution and the escalation in u.s.-china tensions. "squawk on the street" and "mad money" both live with exclusive interviews tomorrow morning we'll be joined by car mine deceive yo and jim breyer. up next, stop trading with jim don't go anywhe.er

. we've certainly been discussing the headwinds in the commercial real estate market. in fact, jim also just mentioning earlier the possibility that meta would take down its employee numbers, perhaps in new york. yet another example, uber now reportedly downsizing a third of its san francisco headquarters the company apparently looking to sublease nearly 3,000 square feet of office space

downtown san francisco's offices are available for lease, sublease that number eight times prepandemic. jim, they may not need the space, but it's not clear they're going to be able to get anything for it should they put it back on the market. >> no. the other place that we're focused on in terms of leases where there's basically ghost offices is in new york places like twitter. places like google just nothing going people aren't coming to work that's not just, by the way, because they're working at home. there's no need for the space. >> yeah. no it goes back to, of course, our continued conversation about work from home, the hybrid working that's now seems to be something with us forever. even on mondays -- it's tuesday, wednesday, thursday when people seem to be willing to consider

coming to the office. >> 28 minutes from door to office, from summit, new jersey. never like this ever 28 minutes easiest commute in the world used to be about an hour and 15. >> you got that going for you. what do we have for stop trading? >> a report by bank of america, really surprising. which is that google has not been hurt one bit by bing. not at all if anything, looks like things are positive and samsung's staying with google. i thought that you would start seeing bing hurting google no it's doing very well, which is one of the reasons google stock is up today. i think it's the situation, my travel trust owns it and the pressure put on it by bing is going away. >> they have nonroad show investor meetings i'm told going on with the cfo, jim. >> tells a great story i'm a huge fan of ruth

i believe that company has not figured out necessarily what to do with the justice department they're not worried. >> yeah. >> i won't say worry everyone is worried about justice department the ftc will they go after anything that is done anymore? >> they can go after stuff doesn't mean they're going to win. for example, nobody thinks they have a shot of winning that complaint they brought last week ans against amgen, except maybe them. >> i don't think they're happy with you talking to musk these are things not supposed to -- they don't like anything, two entities seem to get along. >> they're going to bring an action against me for talking to elon musk. >> why not. >> antitrust. >> collusion you people, you talk to him. that's how -- people joke about the ftc these days they really do. >> i know. >> they just joke about it. >> the spread in the pfizer

deal, the spread enormous for no apparent reason. >> such a good deal. they will never have the money to develop the anti-cancer drugs. i lost my mom to a cancer that seagen has a formulation for she would have lived if sea gen would have merged with pfizer. >> ten seconds to tell us on media. >> skyworks solutions. >> we'll see you tonight but i'll see you tomorrow in california we'll be face to face again. quick break here. >> we'll collude we planned well for retirement, but i wish we had more cash. you think those two have any idea? that they can sell their life insurance policy for cash? so they're

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good monday morning. welcome to another hour of "squawk on the street. i'm david faber with morgan brennan. we're live from post nine. carl and sara both on assignment give you a look at the markets half hour into trading this morning. you can see the s&p is up ever so slightly. the nasdaq, though, continued strength in that index. >> 4196, just below that 4200 level for the s&p. everybody has been watching that we're 30 minutes into the trading session. three movers that we're watching shares of pacwest rallying

the bank selling $2.6 billion portfolio of construction loans to kennedy holdings. the bank agreed to sell six loans to kennedy wilson with a balance, principal balance, of $363 million meta, meantime has been fined a record $1.3 billion by european privacy regulators over the transfer of eu user data to the u.s. the protection commission told meta to suspend, quote, any future transfer of personal data to the u.s facebook says it will appeal the decision and the fine. shares are popping, though they're up 3%. and a we have a deal in the energy space this morning. chevron agreeing to buy pdyful in -- pdc energy in an all cash deal a big week for investors, debt ceiling talks resume as the stocks are off some of their best -- stocks are off of their best week since march.

we also have a lot of headlines from the fed today or i should say fed speak today. we're all over that with team coverage let's start with kayla tausche, at the white house, and the meeting between president biden and house speaker mccarthy that's going to happen later today. hi, kay kayla. >> morgan, president biden proposed that meegtsds in a call with house speaker kevin mccarthy on his way back to washington after weekend talks held on their behalf hit snags negotiators are already at the capitol this morning to try to break new ground this that you're looking at right now is video from last night when they met for 2 1/2 hours. they broke at around 8:30 but did not really break any new ground or make any progress. they pressed pause on friday and again on saturday. both sides are still at odds over where to set spending levels and for how long, which are two pretty basic tenants of any potential deal the white house, for its part, proposed keeping discretionary spending flat into the next fiscal year, a 9% decrease from

the budget it put forward in march. republicans proposed increasing defense spending while cutting other social programs and increasing work requirements for those receiving medicaid and food stamps. president biden at a press conference yesterday in japan at the close of the g-7 summit said he doesn't want to extend trump era tax cuts or do anything that would be seen as increasing poverty. >> i'm not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistance at nearly 1 million americans it's time for republicans to accept that there's no bipartisan deal to be made solely, solely on their partisan terms. they have to move as well. >> president biden says the administration does not have any options to raise the debt limit unly naturally that would be without a challenge in the next ten days without a deal secretary janet yellen says the treasury

department would have to make hard choices about which bills to pay they've never been in that situation before david and morgan. >> yeah. and the hope and certainly the market consensus for now is that we won't be in that situation again, but i know she's really sticking firm to that june 1st number the defense spending piece of this puzzle, we've seen those stocks sell off on the uncertainty around the trajectory of defense spending here domestically, the comments from mccarthy over the weekend about that as well, is there growing sense that yes, discretionary spending is in focus right now as they try to put a deal together here for the debt ceiling, but maybe defense is off the table and you're still going to see some potential increases there? >> well, discretionary spending is the only part of the budget where a deal can take place. republicans and democrats alike have said that they're not going to touch entitlement programs. republicans have said they're not going to raise revenue so that essentially leaves you with discretionary spending.

as far as defense spending goes, the biden administration has proposed is essentially keeping it where it is right now they say that we have been at a heightened level of defense spending for the last couple years given the situation in ukraine and some of the changing posture overseas, and so even though they're keeping it flat, adjusted for inflation, that would be roughly $90 billion cut to all discretionary spending, they say that would be a win republicans say no, we need more defense spending and steeper cuts to other programs and that is really where they don't see eye to eye, morgan it's unclear whether the president and spooeeaker can moe the ball forward on that point or willing to give up wiggle room with ten days before june 1st. david? >> yeah. thank you. kayla tausche, at the white house. a lot of fed speak to kick off this week. steve liesman is tracking much of that for us. >> good morning. minneapolis president neel kashkari in a cnbc interview

suggesting he's inclined to back what we call a hawkish pause at the june meeting where the fed would not raise rates, but leave the possibility or the door open for future rate hikes. >> i think right now it's a close call either way versus raise another time in june or skipping some of my colleagues have talked about skipping. important to me is not signaling we're done if we were to skip in june does not mean we're done with our tightening cycle we're getting more information and do we raise in july potentially. that's the important "the exchange" me, we're not taking it off the table. >> st. louis fed president jim bullard speaking in florida this morning was nearly definitive about the need for additional rate hikes, saying i, quote, i think we're going to have to grind higher i'm thinking two more moves this year as in that's 50 basis points, putting bullard and other more hawkish fed members at odds with markets and

economists who see -- say the fed is done at this 5.13% rate and even see rate cuts on the way. the latest survey showing a plurality of 49% see rate cuts in the first quarter of next year economists had been equally divided would it happen in the fourth quarter or first quarter. the market sees 45 basis points of rate cuts this year coming up this afternoon i'm at the new york fed, the national economics challenge. you will watch the brightest economic high school minds in the country live here on cnbc. we're going to have a bit of that competition at 1:00 you can watch the full competition online i promise you, it's going to make you think there's hope for the fed and for fed leadership but maybe in the next generation >> yeah. hope for the future. i have to say, you're very color coordinated with your background today, steve speaking of, there's a lot of purple happening we're looking forward to that. i want to go back to -- i want to go back to the comments from

bullard and kashkari bullard, nonvoting member this year kashkari is. the way "the wall street journal" framed it over the weekended kashkari is the biggest voting hawk. i wonder if you see it in hawks ve versus doves and how significant the comments he made on our air are? >> i think they're significant they want to leave this on the table and that gives them leave to pause which means the market will understand or think that -- not begin to think, that the fed has given up on fighting inflation, still something they want to do but take a look at the effect of what's happening with a pullback in lending from the banks and the second is the cumulative effects of all of its heightening that's happened so far. remember, morgan, it was not unusual for the federal reserve to hike every other meeting. it's what they used to do. the idea that we've been through right now or this run we've been through of ten in a row is what's in unusual. the fed being so aggressive as it's been. the fed likes to do in this a

measured way and the idea of pause now and maybe coming back in july, if the data still speaks of high inflation, that would be a more normal course for the federal reserve. >> okay. steve liesman, thank you we're looking forward to this afternoon. we'll turn to the markets with the dow down 200 points, the s&p down quarter of a percent coming off the best week since march for the major averages mike santoli is keeping an eye on the levels and joins us at post nine right now. >> pretty logical spot for the market to take a pause and not just because of what's going on with the debt ceiling and kind of still have the back and forth about what the next move for the fed is going to be, but simply because we have made this kind of progress in the index almost everybody who has looked at the range we've been in for the last really year, would say oh, 4200 looks like it's going to be a hurtle, only traded above this level for ten trading days in the last year. it's understandable why the market is holding up as well as it is. if you look at where we are now versus a few months ago, a few

months ago we thought terminal rate for the fed will be 6% because we had the hot january data earnings cliff coming, we haven't hit it yet and i think that's pretty -- i think it's pretty reliable observation right now. then the nasdaq has had a breakout to 52-year high, 18 months without one, on a mechanical basis tends to be bullish. you have this a.i. growth story that's making its way through all the big stocks we know that you can say it's half hype, two-thirds hype, it's actually recognizing a true economic, you know, kind of revolution to come doesn't matter what you think about it it means it's helping these nasdaq stocks make up the ground they lost last year. except for nvidia, still not at nearly the highs on those stocks except for apple that we saw in 2021. >> you talk about the mega cap oftentimes you talk about the weather of apple alone -- weighting of apple alone at 7%. meta, despite that $1.3 billion

fine, we mentioned earlier at least, i'm hearing the potential for more job cuts there. perhaps not as included quite as often in the a.i. basket is perhaps some think it should be, which you typically think of microsoft, alphabet, nvidia, and then maybe apple, maybe tesla, certainly maybe -- >> it's fascinating because you can -- the market doesn't tell youwhy the price is going up so you can have a story that says well, it's not really considered in the a.i. basket but moving like those stocks the earnings forecast for meta this year are up like 23% in the last few months. people are running the cost cuts through the numbers. it looks like ad market may stabilize. you can say that either it should get more credit or less credit for that. the fact is, the earnings trend has inflected for some of these stocks that's being captured by the market. >> yeah. just the fact that market is top heavy with the seven biggest names or what have you we get nvidia earnings after the

bell how much does that matter to the broader s&p this week? >> because of the math it matters. nvidia has been a singular story, though, in terms of how the stock has behaved, the magnitude of the market cap gains relative to the rest of semis it's almost its own beast. now if you can tell me that's the lead dog for the enthusiasm of this market for retail risk appetites, maybe so. i don't know that it's necessarily a bell weather to tell you what's going on in other business it might be about investor sentiment. >> thank you see you on "closing bell: overtime" too. >> let's move on to the banks. jpmorgan is meeting with investors today. its ceo jamie dimon will speak later in the day leslie picker joins us live from the event and has headlines for us as well. >> david, we'll hear from jpmorgan chairman and ceo jamie dimon this afternoon, but in the meantime the investor day is comprising presentation from the heads of the individual business

lines. the co-ceos of consumer banking are expected to dig into the impact from the first republic deal jpmorgan acquired certain assets and liabilities of the failed lender out of fdic receivership last month the firm revealing this morning that deal adds $3 billion to its net interest income guidance for the year bringing the total target to $84 billion. the projections don't include the integration costs, nor the special assessment from the fdic to replenish its insurance fund from the failed banks expected to be in the billions of dollars. still, jpmorgan shares little changed this morning for what's already the best performing universal bank year to date. for lenders do note sources of uncertainty remain and two key variables for deposits are quantitative tightening and other monetary policy factors. deposits were down slightly year over year mostly from commercial that the ceo believes will

persist. the. >> we expect systemwide deposits to continue declining. in light of these pressures, it's, therefore, important to reiterate our deposit strategy we will fight to keep primary banking relationships but not going to chase every dollar of deposit balances. >> earlier this morning president and coo daniel pinto said the u.s. economy and consumer are doing fine, but they see signs of deter rating die mon is likely to give more color this afternoon hopefully we can hear more extrapolation on those ideas, david. >> he always givies more color. we'll see. i know you will be covering it for us thank you, leslie picker. >> a road map for the hour china is cracking down on a u.s. chipmaker warning its products are a security risk. the fallout for the stock in question and the semiconductors. plus, roger altman weighs in

on debt talks, the fed and why he sees a shallow recession ahead. investor shrink concerns continue to be a focus for retail as many more companies in the space report earnings this week we have got a lot more ahead stay with us from big cities, to small towns, and on main streets across the us, you'll find pnc bank. helping businesses both large and small, communities and the people who live and work there grow and thrive. we're proud to call these places home too. they're where we put down roots, and where together, we work to help move question and the semiconductors. stay with us on debt talks, the fed and why

markets are swinging around that includes the transports shares of norfolksouthern and union pacific, upgrading those names to buy saying it sees the

constructive outlook for next year with service facing comps in pricing remaining above inflation. as you can see everything is basically turned lower except for norfolk southern up fractionally the s&p and nasdaq coming off their best week since june our next guest says this year's rally has been almost a perfect mirror image of what we saw last year and focused on high quality stocks given major cyclical and secular shifts joining us is richard bernstein, adviser's chief officer dan suzuki great to you back on the show. >> good morning. >> why is this a mirror image of last year? >> well if you look at what worked and didn't work last year it's the opposite of this year look back at historical initial rallies, you know, coming out of these big selloffs, this is pretty typical stuff i don't think that people should be reading too much into the com position of leadership with this market i think that's kind of always

how these balances go. this doesn't necessarily make them sustainable ultimately you have to come back to fundamentals and if you think about profits and liquidity those two things are still worsening and that suggests to us that it's a little bit premature to be positioning for the big recovery when we don't know how far and how deep or how long this earnings recession is going to go. >> you sound like you're very cautious as far as equities are concerned. so if that's the case, how would you be counseling investors to be positioned right now? >> morgan, i think, you know, you sort of allouded to this in the intro. if you care about the next five to ten months the fact that we're in a [ inaudible ] i think tells you you want to be focused on high quality assets when things go wrong, this is sort of the macro backdrop when things go wrong if your time horizon is longer five to ten years, you can be a lot more optimistic. i think the key is you don't necessarily want to be

optimistic on, you know, the fire cycle leadership. you take out prior cycle leadership like u.s. large cap growth, innovation technology, and you think of the defensives, the entire market is a pretty -- is pretty fair game. i think everything out there trades cheap and a lot of those areas are actually putting up better and more resilient earnings fundamentals than the areas of the market that people are chasing. >> yeah. i mean, u.s. markets are contending with a number of bigger, more macro issues, whether it's the debt ceiling, drama that continues to unfold in real time right now with the clock ticking or the regional bank angst among other things. is the u.s. still the best place to be parking money right now and putting it to work or do you look internationally when you have japanese and german stocks, for example, hitting fresh highs? >> yeah. that's the point i think that u.s. market is where everybody wants to be because people tend to chase performance. and that's been the leadership

for the last decade or so. and i think that's just [ inaudible ] look at relative funds, you know, the rest of the world is showing more resilient earnings, yet they trade at discounts in the neighborhood of anywhere between 20 to 50% cheaper in the u.s. with a lot less concentration to the areas that i think put the market at huge concentration. >> dan suzuki, thank you for joining us. micron shares are down this after china takes aim at the chipmaker. what's that going to mean for the company and other semiconductor companies and their stocks we'll discusths at dominic ch whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets

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welcome back to "squawk on the street." shares of micron are under pressure as china calls the company a, quote, major security risk kristina partsinevelos is here with the details and the fallout and, last i checked, it looked like micron paired some of the losses we had seen before the market had actually -- >> yeah. we've known about this --

network infrastructure related memory chips made by micron. although management this morning said they don't exactly know which products will be included they don't believe pc and smartphone chips will be affected that's a big business from china for them that's a good thing. shares are falling like you said, but pairing back earlier losses the cfo spoke at jpmorgan's tech conference at 8:00 a.m. eastern and remained really optimistic he anticipates the affect to revenue would not be above double digit range if you include all entities chinese and non-chinese the impact could be a little bit larger, about 25% of total revenues for now, they have not changed their guidance for the quarter that could change. they're still -- they only received this information yesterday. keep in mind a lot of this is fluid. micron is part of the big three

players, including samsung and hynix to make these chips. the u.s. has asked the south korean chip makers to step up and not do business with china the ft article says south korea doesn't want to wade into the dispute and would defer to the companies. so without more details about the event it's natural to wonder whether china is retaliating after the u.s. government last year implemented trade restrictions on certain technology to china. apple had to abandon plans to use chips from ymtc a chinese memory maker nonetheless a lot of analysts remain upbeat pointing out memory chips are commoditized. a short-term imfookts micron but the impact should be adjusted quickly. guys >> how do we compare this to some of the commentary we got from president biden over the weekend where he basically said that u.s.-china relations will impr improve shortly, the spy balloon as a silly balloon

there's rhetoric and meeting planned on the books this week too and then the actions being taken. if you're a semiconductor company, how do you navigate this terrain are we seeing substantial moves by some of these companies to actually, i guess, shift. >> move business, of course. this is not something that's new. this has been an ongoing problem over the last year or so for micron, they were the low hanging fruit. they did or do have small exposure to their network and infrastructure, but overall, it shouldn't affect their business compared to other companies if they were to get completely bent why not go after micron, the easiest player, the pawn if i may say in this escalation it seems micron overall if you're talking about the company, they said also this morning that memory is up. they're expecting closer to quarter over quarter growth, growth in the second half and most of their business comes from consumers than networking

it does not go with what biden said after the weekend but this must have been in the cards for a while. two months ago china warned they would go after micron. who could be next and who stands to benefit some of the other equipment makers like kla -- i didn't check, could be trending higher but benefit in the short term. >> okay. >> rhetoric at this moment. >> kristina partsinevelos, thank you. >> thank you coming up next, debt ceiling talks, fed speak and more. we're going to discuss with roger altman where he sees things heading, why he expects a shallow recession. back in two with the markets mixed. the dow down about 84 points

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(funky electronic music) (narrator) invest in. believe in. move in. grow in. build in. thrive in. all in north carolina. ranked america's top state for business. welcome back to "squawk on the street." i'm bertha coombs. here's your cnbc news update at this hour. bryan kohberger, accused of the stabbing deaths of four university of idaho students is scheduled to be arraigned today.

kohberger is expected to enter a not guilty plea. he's said through a previous defense attorney that he believes he'll be exonerated if found guilty he could be sentenced to death. the body of a second missing brox boy has been found. 11-year-old alpha berry's remains were pulled from the hudson river on saturday morning, just two days after his friend garret warren's body was found. the two boys went missing may 12th. spacex's axiom mission 2 has arrived. the crew of four led bay retired nasa astronaut working for the company and includes the first woman from saudi arabia to go to space. they will spend over a week in space before returning home with a splash down off the florida coast. david? >> i'll take it.

this is axiom's second mission to the international space station, the second private mission we've seen this is the tenth human space flight. >> i knew you would be all over this and know every detail. >> it's incredible thank you. >> wow all right. president biden and speaker mccarthy set to resume talks on the debt ceiling that will be later today our next guest s will be hard. joining us here at post nine is senior chairman roger altman. >> thanks for having me. >> how hard are things going to be what are you kind of looking for, as tells here, that may give us a sense of what's happening? >> why don't we start for a minute putting the whole thing in perspective the entire idea that the united states requires separate legislation to authorize the borrowing which the budget process has already set is misguided and unfortunate. if you think about it, we have a budget process that sets levels of taxation and spending

it results in an outcome say a $10 deficit. you know that national debt is going up by about $10. and it's automatic in our country, no, you have to then pass a separate bill to increase the national debt and what's going on right now, as everybody knows, is that the republicans, especially the house republicans, are essentially trying to achieve a different budget outcome than they were able to get during the normal budget process through holding the debt limit and threat of default hostage. >> all true. >> it's hard, but -- >> so what it's what's happening, right >>, but it's useful to put it in perspective. it's going to be hard. republicans control the house and democrats control the senate and the white house. and getting a deal on spending caps, again, we're not in the ordinary budget, which democrats support, on the other hand getting an outcome on extending

the debt limit which republicans can support, especially in the house where republican caucus is very divided and there's extreme elements, that's going to be a hard negotiation. >> are you surprised that the president has engaged in it at all? as he seems to be. there was some -- for a long time just saying we won't negotiate. >> the president has to do that because if we have an unfortunate outcome here like a one or two day default, really a technical default, probably the president, he's the ceo, in fact, will get the most blame. so he really can't all the way through the process step back and say you guys solve it. so there's no surprise there i think most people know what outlines of a deal are going to be there will be a spending cap extension of the debt limit like two years. there may be work requirements on safety net programs

there probably will be a claw back of nonspent covid money as i said there will be a certain agreed length of extension of the debt limit. it will have to go beyond the 2024 election so at least a year and a half, probably two years that's going to be in the final deal but exactly, for example, how deep the spending cut is through the cap, that's a tough one. >> that's a tough one. and you think they're going to get to a deal? you don't think we'll go a day or two days -- >> i'm not sure of that. >> okay. >> because i think passing, among many other things, this bill in the house, is really going to be hard i think -- mccarthy only has four-vote margin and there are some republicans in the house who talk as though they would be comfortable with default so getting the bill through the house is going to be a tough one. now, is it possible we could default for a day or two yes. that would be very -

>> how bad would that be >> that would be costly. in 2011 we came close, we didn't actually default, but cbo later estimated the nervousness about the possibility of default cost the taxpayers, ready for this, $1.3 billion. >> not billion, probably - >> no billion in that sense. >> just the nervousness for a couple days. if you actually were over the edge for a day or two, the cost would be higher than that. it's like throwing money out of a helicopter totally wasted spending which is taxpayer money. >> yep. >> i can't say we won't go over the edge for day or two because this is one of the hardest negotiations you could imagine now, it could always surprise us and come to an agreement in a smooth fashion and you saw even last night and this morning talk about productive discussions, although i don't know what that means, but it's a tough negotiation. >> what does this mean for the

markets? we've seen gyrations in the treasury market so far looking back to 2011 how did the markets react? the markets reacted adversely. here, if we really get close to the x date, of course, a bit of a moving target, secretary yellen said it's june 1, goldman sachs said it's actually the 8th or 9th, hard know because it depends on the incoming revenue, but if weget close, markets will act very adversely and by the way, you can see yields on the fixed income side have been rising and as a sign of anticipated turbulence so, this could get ugly. one of the ironies here, is that many people think, i agree, that markets will have to get ugly order to force the negotiators to settle. there's a built-in ugliness

about it that's unfortunate but probably real. >> i always like to ask the psychology in the board room, but your day job, advising companies and ceos what they should do, is this figuring into the conversation in terms of i'm going to hold off or depressed about the fact that we can't get this together? >> the macro economic and uncertainty over it is a bigger factor than the debt limit at the moment you hear talk about the debt limit once resolved and it will be resolved, it will be entirely in the rearview mirror and that will probably be within a couple weeks. but there's a lot of concern about an impending recession. that's the consensus expectation now, among ceos. all the surveys show that. historically, when there's uncertainty about the business outlook, companies tend to look inward or focus inward, not

focus outwoard. there's uncertainty. i wouldn't say m&a conditions are bad. they're just softer than they were quite a bit softer than they were a year ago as everybody knows. >> if ceos are expecting a recession to take root here, have we seen the impacts of those company's preparations on the economy yet? >> i would say no. the expectation i'm hearing is a shallow recession, so our own forecast at evercorps isi is minus 2 for the third quarter. now minus 1 for the third quarter, two fourth fourth quarter, minus 1 for the first quarter of '24 a shallow recession. i don't think anyone is expecting '81 or '82 recessionary conditions. some think we won't have a recession. goldman sachs estimates that we won't. so i'm not seeing a lot of, for example, layoffs because those typically happen only when business conditions have already really declined. i also don't think we're going

to see a lot of layoffs because we have a 3.4% unemployment rate the ratio of job openings to unemployed workers is 1.7 to 1 it's hard to find workers. we're not going to see a lot of heavy sflufs on m&a we did see a boutique get sold greenhill, a name we've known for a long time evercorps is more than that. jim asked me earlier is this going to set off a wave of banks, japanese bank, buying some of these investment boutiques. >> i don't think so. i think it's larkgely a one off i wish them well i wish mizuho well i might note the history of acquisitions of securities and investment banking firms by firms, at least whose main business is not that, is not a history of great success but hope this works sflo it's

wor - >> it's working now. >> i meant for the buyer. >> understood. i know what you meant. roger altman. >> citi warning of downside risk and esebtstivety in athletic apparel. downgrading foot locker. nike down 2.35%. foot locker another 5% we'll talk about the retailers reporting this week. that's next. >> plus, this week we kick off the inaugural ceo council summit on the west coast. we'll have a lot of leaders and legendary executives exchanging ideas as the debate rages over finances and ai revolutions. "squawk on the street" and "mad money" both live with exclusive interviews and tomorrow joined by ey ceo carmine di sibio, and breyer capital we're back after this.

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welcome back it's been a mixed bag for retail results. courtney reagan has more on what to expect. >> if reading the consumer was a game of red light, green light, retailers are flashing yellow. the remainder of the year looks murky. the discretionary categories like home, apparel, electronics were soft. walmart and target isn't promising for kohl's gap, best buy, american eagle and abercrombie. cole's has a new ceo and gap hasn't named an executive. home depot citing conservingtive projects and poor weather trends, concerning for lowe's results out later than home depot by about a week. shares tumbled after the quarter leading some analysts to lower expectations for dick's sporting goods but merchandise mix is

for nike dick's has had steadier sales trajectory with a tenured leadership also foot locker's shoppers lower income footwear and the group that is the group that is most pressured as we watch conditionslle in focus of those reporting this week lowe's, dick's, bestamon those that have called that out as an issue in recent quarters morgan >> courtney, thank you we're going to stick with retail companies reporting shrinkage of inventory due to theft and robbery as you heard courtney talk about target reporting $1 billion lost due to organized retail crime, the problem widespread our next guest has been vocal for a long time and says the major issue is quote lack of data joining us california retailers association president rachelle michelin great to have you on the show. is that the issue or policy? >> you know, i think it's a mix

of both and i think one drives the other. because we don't have really good sets of data, both sides, more on the criminal justice reform side and those saying that we need new policy changes around retail theft can both say it's rising. i take it from what i hear on the street every day everyone i talk to, particularly in california has a story of someone they have seen going into a store and stealing. the videos from our stores, hear it from our employees. we think there's a problem and we have to find solutions to this or it's only going to get worse. >> so then what do solutions look like? i realize prop 47 in california which was passed into law back in i think 2014, has been attributed to or been pointed to as a cause, nonviolent crimes that don't exceed a certain amount of money converted into misdemeanors is that the issue or something

more going on? it does seem like this has become a crisis much more epic proportions recently >> you know, i think it is part of the problem during covid when a lot of stores were shut down and cities were baron from people going downtown to work, you saw more and more people taking advantage of the loopholes, candidly and prop 47. the problem is what we see in california, are repeat offenders. going into the stores, over and over again, they're stealing they might go out on the street and sell that merchandise, purchase drugs or other things, go back in the store and steal again. they can do that in california because under prop 47 we cannot ab gre gait up to 950 or have petty theft with a prior people know the loopholes. the criminals are smart. what's scary, that's where it starts it starts doing the low thefts under $950 they realize i can get away with

it they steal more and more which leads them into these organized retail crime rings where candidly these crime rings are taking advantage of vulnerable populations, people with addiction problems, our homeless population and because of prop 47 we can't offer the help they need to lead these destructive lifestyles. >> kr california is a microcosm. what companies and goods and retailers have been most affected >> you know, candidly, every retailer you know, interestingly you hear about the big retailers, the national brands, for every national brand that is reporting loss due to theft think about how many small businesses in the state of california or across the country are also being impacted by retail theft this is a widespread problem but, you know, you go into stores like target in san francisco, and a lot of products, personal care products, are locked up. i think you're going to see that

more and more. anything that a thief can sell easily, they're going to steal they're going to make money off of it. until policymakers and retailers and law enforcement are willing to sit down and have some really difficult conversations, we all have responsibility in finding solutions. we all be working cooperative to find those solutions. until that happens, i don't see any relief in the future. >> thanks for joining us something to watch when we do get those retail results this week, david. cnbc is celebrating asian american and pacific islander heritage throughout the month of may, sharing stories of influential business leaders here's chief revenue officer >> growing up in an asian household, my parents have instilled values of hardship, believing in myself and giving back to community. and i've charted my career based on those values. i have taken up opportunities

where historically there has been a very low representation of women i have seeked out mentors that value diversity, that value who i am, what i bring to the table. so, i think mentorship, giving back to the community, and as we get more senior, creating that time and space to nurture the next generation of talent would be my message to everyone.

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we've been talking a lot about commercial real estate one major market out west seeing things go further south. diana olick joins us from los angeles and she has that story diana? >> david, los angeles may be a smaller office market than new york but the vacancy soared to 22.5% in the first quarter compared to manhattan at 17% this represents 50 million square feet, 61% more pre-pandemic l.a. leasing volume in q1 was very low what is leased is still not being used very much average occupancy in l.a. is

49%, slightly lower than the national average l.a. is where we saw those two big brookfield defaults. the market is pretty bifurcated. l.a. has faring better, tenants and tech, advertising and media, while downtown is finance and law. reits with the biggest exposure are douglas emmitt and kilroy and hudson pacific hudson pacific down around 50% douglas emmitt, the most exposure, but all of these are heavy in west l.a. or other areas surrounding downtown now, as with everywhere else, is there is a flight to quality with newer amenities seeing more demand and older buildings suffering more back to you. >> what are your expectations over what time period is all this restructuring that's essentially going to have to take place because of the significant changes that have taken place in the way people work, how long will this take for this inventory to finally sort of be absorbed?

well, i think again it's going to be those newer buildings that are going to be absorbed much more quickly it's with everything else, it's when people are going to get back in more than three days a week, get to four or five? as we look at the nation, i think in different parts of the country you see -- i'm based in d.c., as you know. we're seeing a lot more return to office there because you have government, et cetera. out in l.a. where you have to drive a lot farther in general, there's traffic issues and people want to work from home more, it may be slower and, again, more quickly in manhattan where you don't have those commuter issues, you have better rapid transit than you do out here >> diana olick, thank you. a lot of california love happening today on the show ahead of your trip. >> it's a big state. a lot of people there. pretty big economy. >> yeah. well, later today, "closing bell: overtime." don't miss rockefeller international chairman ruchir sharma, he'll be talking china today. specifically says in a new column in the ft, quote, there has never been a bigger

disconnect in my experience between the rosier bank views on china and the dim reality on the ground we've seen that, for example, with copper prices, which have continued to sag this idea that the reopening is choppier this is a bigger more macro china economy take >> morgan, thanks for being here today. good to have you back at the desk. >> yeah, it's good to be with you. we have some of the mega cap tech names having a good day nasdaq comp is up some, 0.27%. ghaf see ctiestrt"onnu rit ter this stay with us

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goom good monday morning i'm melissa lee and mike santoli. omarin inaguilar. the so-called godfather of silicon valley, ron conway is with us, calling for strict regulation on ai before it's too late. the man who called china's boom and bust, hao hong will join us on g7 coupling and the swipe on micron. very modest moves. s&p 500 hovering